| Struggling lenders are poised for liquidation as the crypto crash claims more victims. That likely spells more market pain as assets hit exchanges, but it also raises existential questions for this subset of the crypto world. Details around the size of the potential flood of digital assets coming our way are scant, but it's almost certainly not going to be pretty. Celsius, Babel Finance, BlockFi, Three Arrows Capital, Voyager Digital and most recently Vauld are among those revealing distress, with several hundreds of millions of dollars — if not billions — potentially destined for liquidation to offset outstanding liabilities. Cumberland, a digital-asset trading firm, says uncertainty over the size and timing of expected asset sales are "hanging over the market like a cloud," as traders wait to see the impact of crypto's own 2008-style reckoning. Some might have thought the situation couldn't get any worse: A passion for leverage and tendency to take risky positions with customer funds has already left a chunk of the sector in turmoil, while the resulting knock on crypto prices means even some of the biggest companies in the industry are laying off staff. Cumberland says it's not over yet, and to expect a process that will be "messy, time-consuming, and fraught with legal complication. " In a series of tweets on Tuesday, Cumberland noted that any market recovery will be determined by the rate at which those liquidated assets can be snapped up. But exactly who the buyers will be is also still undetermined, excluding a few wealthy players like crypto exchange FTX who have stepped up with lifelines to some of those in trouble. The lack of transparency from failing companies about their impending market impact — and a lack of understanding about which firms might be hit next — is making things worse. Some crypto bosses, like Vauld CEO Darshan Bathija, rushed to loudly promote how their firm was rising above the mayhem last month ... …. only to see the opposite turn out to be true within the space of a few weeks: So much of crypto's power is fueled by online hype, a steady flow of Silicon Valley capital and faith in the system's promise to reinvent finance. But if customers can't take the CEO's word on their company's health, and there's even more volatility set to hit markets as troubled lenders unwind, then it's hard to imagine who might hang around to find out if that trust will be rewarded. Cutting through all this mess are decentralized platforms like Aave and Compound, which so far have appeared to escape the same fate as their crypto counterparts in centralized finance, or CeFi. To some extent, the transparency built into their operations may be providing observers and investors with a degree of calm. Unfortunately for those hoping a full-blown CeFi revival when the market disruptions are through, the days of enticing customers with heady yields and too-good-to-be-true incentives appear to be long gone — and scarred investors may not be drawn in so easily on the other side of this winter. | 
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